Obama promotes health plan’s drug rebates for seniors

Facing continued public skepticism about the new healthcare law, President Obama traveled to Maryland on Tuesday to tout the distribution of $250 rebate checks for senior citizens who hit the so-called doughnut hole in Medicare’s drug coverage, one of the law’s first benefits.

At the same time, the president announced a new initiative to cut in half the amount of waste, fraud and abuse in the Medicare program by the end of 2012 — an ambitious goal that would require the federal government to recover as much as $18 billion.

“I want to send a notice to all who would swindle and steal from seniors and the Medicare system,” the president said during a town hall meeting in suburban Washington. “We are going to find you, we will prosecute you, and we will ultimately prevent those crimes from happening ever again.”

Government authorities recovered $2.5 billion in 2009, according to the Department of Health and Human Services and the Department of Justice, which are jointly charged with stepping up enforcement.

The Health and Human Services Department estimates that it made about $35 billion in erroneous payments that year in Medicare’s fee-for-service program, or 12.4% of the total.


The president’s healthcare town hall comes as the administration labors to demonstrate that the momentous healthcare legislation will yield tangible results, even though most of the big new protections for consumers are not scheduled to take effect for several years.

Republicans quickly criticized the president’s latest effort to promote the new law.

“It’s another in a long line of false starts and mishaps for the Obama administration’s attempt to sell its government takeover of healthcare,” House Minority Leader John A. Boehner (R-Ohio) said Tuesday on his website.

Obama warned seniors at the town hall meeting in Wheaton, Md., and those listening in from around the country, that repealing the law, as some Republicans are proposing, would have serious consequences.

“They’d roll back the rebate to help you pay for your medicine if you fall in the doughnut hole,” he said. “They’d roll back the free preventive care for Medicare recipients. And … they’d roll back all of the insurance provisions that make sure that insurance companies aren’t cheating folks who are paying their premiums.”

This week, an estimated 80,000 seniors who hit the coverage gap are expected to start receiving their $250 checks, according to the Department of Health and Human Services.

Seniors now enrolled in a Medicare Part D plan pay 25% of the cost of their prescription drugs until the total bill reaches $2,830. At that point, enrollees must pay the full cost of their prescriptions until their total out-of-pocket spending reaches $4,550 — a coverage gap known as the doughnut hole. Catastrophic coverage then kicks in and enrollees pay 5% of drug costs for the rest of the year.

More rebate checks will go out monthly until the end of the year as more seniors fall into the gap. The department estimates that slightly more than 4 million seniors will ultimately get rebates.

Starting in 2011, the rebate will be replaced by a discount. Seniors whose expenses fall within the doughnut hole will qualify for a 50% discount on drugs. That will be gradually phased up to a 75% discount in 2020, effectively eliminating the coverage gap.